ABC Enterprises

Income Statement (in $ thousands)

Item	Amount
Sales Revenue	3,200
Cost of Goods Sold	2,000
Gross Profit	1,200
Operating Expenses	900
Operating Profit	300
Interest Expenses	60
Income Tax Expense	40
Net Income	200

Balance Sheet (in $ thousands)

Assets

• Current Assets
  • Cash: 40
  • Accounts Receivable: 180
  • Inventory: 260
  • Total Current Assets: 480
• Long-Term Assets
  • Property, Plant & Equipment (net): 520
  • Other Assets: 400
  • Total Long-Term Assets: 920
• Total Assets: 1,400

Liabilities and Equity

• Current Liabilities
  • Trade Creditors: 200
  • Short-Term Bank Loans: 100
  • Total Current Liabilities: 300
• Long-Term Liabilities
  • Long-Term Debt: 500
  • Other Liabilities: 100
  • Total Long-Term Liabilities: 600
• Total Liabilities: 900
• Equity
  • Common Shares: 250
  • Retained Earnings: 250
  • Total Equity: 500
• Total Liabilities and Equity: 1,400

Required:

1. Compute the return on assets (ROA) and return on equity (ROE) for ABC Enterprises.
2. Evaluate the company's profitability using the gross profit margin and net profit margin.
3. Analyze the company's liquidity position using the current ratio.
4. Discuss the potential impact of increasing long-term debt by $100,000 on the company’s financial health.
5. Recommend strategies to enhance the company’s operating profit margin.